Incentive Or Salary For Sales Staff: Which Is Right For Your Small Business?

Taking care of employees is the first step in having a successfully run business as they are the face of the company. Happy employees means a lower turnover rate and savings on costs associated with the hiring process. Compensation is important for performing well, and that can be administered through salary pay or bonus incentives for doing a good job.

Know the laws

When paying wages, be knowledgeable of The Fair Labor Standards Act. Exempt employees are not subject to an hourly wage, rather they work 30 hours or 40 hours at a set rate of pay. Salary pay gives the employee a sense of guaranteed pay versus being nonexempt with paychecks fluctuating. Keep in mind that raises are also important so take into consideration the bottom line of the company. Is it economically feasible to pay a salary versus an hourly wage, which includes additional costs such as the 6.2 percent payroll tax per employee?

Incentive or salary?

Incentive pay is an option for rewarding employees. It’s a merit bonus or an across the board pay in a scenario such as the holiday shopping season. Incentive pay is more flexible than salary pay because of crunching the numbers and what the company can afford. It can be tied to the success of the business to reward employees who work hard to ensure the company can grow. That is not always the case however, and a bonus may not be in the budget, thus reducing income with an employee potentially looking to leave for a position with a higher base pay. Salary for sales staff may be the route to go for those workers who have more experience and skill. It will let them know their work is appreciated, and higher wages can be put in place. Another incentive option is the use of commissions. It can be paid out when an employee meets a sales goal or by selling products. For the staff, it’s a driving force to make sure the company’s goal are being met while also being rewarded. Nonexempt employees can be paid a lower wage with a decent commission so the company can keep a healthy bottom line at the same time.

Incentives are much more flexible because they’re not limited to just wages. Along with bonus checks and commission, incentives can be more personal such as extending vacation time or offering to pay for health coverage. Businesses with less that 50 employees are exempt from the healthcare requirement under the Affordable Care Act so offering to pay is an incentive job seekers may take into consideration.